(Bloomberg) — Is Hong Kong’s run as one of the world’s most important financial hubs coming to an end?
It’s an understandable question after one of the city’s most turbulent stretches since pro-democracy demonstrations erupted in June. The past few days have brought a drumbeat of bad news, raising concerns about the independence of Hong Kong’s judiciary, the future of its trading relationship with the U.S. and the prospect of more violence between police and protesters.
Yet interviews this week with investors, lawyers, bankers, diplomats and businesspeople suggest things will have to get significantly worse before Hong Kong’s moneyed classes give up on a city that has defied doubters time and again.
Optimists say that Hong Kong still offers a unique, if diminished, gateway between China and the rest of the world, and that both sides have too much riding on the city to stand by and watch it crumble.
That sanguine outlook may ultimately prove wrong, of course, and there are plenty of pessimists. But for all the talk of contingency plans and capital outflows, signs of a mass exodus have so far failed to materialize. Here’s what people have been saying about Hong Kong’s future:
Richard Harris, founder of Port Shelter Investment Management, who has been in the city for 50 years
There’s been no change to the taxation regime and there’s likely to be almost no change to corporate law. Those are the sort of things that impact businesses. I think in terms of Hong Kong’s economic framework, it’s still extremely good for doing business, and I can’t see how that would be changed by whatever’s happened.
Henry Kissinger, former U.S. Secretary of State, speaking at Bloomberg’s New Economy Forum in Beijing
I hope that the issue will be settled by negotiation that maintains the principles by which decolonization was carried out some period ago. I believe that this is possible, and it should be likely.
Bill Winters, CEO and executive director at Standard Chartered (LON:) Plc
Not much money has actually moved. We’ve seen clients open accounts in Singapore, Malaysia and Taiwan, in that order, but while the accounts were set up, not a lot of money has actually moved. We’re not seeing a crescendo.
The biggest impact of the Hong Kong protests by us has been on our staff. It’s been hard for them to get to work and there’s elements of stress with conflicts at home between people who disagree. We’ve been in Hong Kong 162 years, we’ve been through SARS, the financial crisis, and our business will keep going.
Ronnie Chan, Hong Kong-based chairman of Hang Lung Properties
I don’t think Hong Kong itself can resolve the situation. Every problem eventually will pass, and the same thing with Hong Kong, it’s just a matter of what form and shape it will be. Hong Kong will recover, how much can we recover is the question.
Fraser Howie, author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise”
No one thinks China is about to collapse so there is a need still for a gateway and only Hong Kong offers that. Free flow of money, capital and people is all still possible in Hong Kong, and there still is a strong commercial law framework.
Hong Kong will be a thorn in Beijing’s side. How that escalation comes I am still unsure but there is no chance of going back. The Hong Kong bubble has popped and will not be re-engineered.
Stephen Innes, chief Asia market strategist at Axitrader Ltd.
After the constant weekend carnage in the streets, financial market concerns must play second fiddle to employer safety and welfare, so I can only assume relocation discussions are happening. When you think about it these days, most non-customer facing jobs are pretty much location-agnostic, so there is little holding back foreign businesses from possibly relocating a bulk of their staff.
Piyush Gupta, CEO of DBS Group Holdings Ltd., on clients slowly moving money to Singapore, the U.K. and other locations
People want an insurance policy on Hong Kong.
Phillip Hynes, head of political risk and analysis, ISS Risk
People were horrified by the violence of last week. But the protests couldn’t survive without sustainable support from the working class, and there’s a surprising amount of support from the middle class.
I’d caution against businesses establishing in Hong Kong now. My assessment of the protest movement is that it will continue for a long time; Hong Kong will never return to the Hong Kong it was before, it’s changed already. We’ve yet to see the impact of societal divisions created here. District elections may further polarize that.
Hong Kong will be an unwelcoming investment and business environment over the next few years, and very volatile.
Pauline Loong, a veteran China watcher and managing director at Asia-analytica in Hong Kong
Hong Kong will always have an international role regardless of political developments. But without confidence that its systems are not being subsumed into that vast opacity of mainland practices, its role would increasingly be confined to one of providing China-related services.
China is too big a market and Hong Kong too important a conduit for Chinese capital flows for anyone to make a move without a war plan on the scale of the invasion of Normandy, and that takes time.